Millions of banking customers across the UK could be due refunds after payment provider Mastercard lost a Supreme Court appeal.
The UK’s highest court has ruled on a £14billion damages claim brought by former financial ombudsman Walter Merricks against Mastercard on behalf of an estimated 46.2million UK consumers.
Judges dismissed an appeal by Mastercard which means almost every adult could be line for a £300 payout in the form of damages for excessive fees, The Mirror reports.
Merricks said that Mastercard’s breaches of competition law led to UK consumers paying higher prices on almost all purchases from businesses that accepted Mastercard between 1992 and 2008.
He said that the fees it charged shops – which were later declared unlawful by the European Commission – resulted in consumers paying inflated prices.
“Mastercard has been a sustained competition law breaker, imposing excessive card transaction charges over a prolonged period in a way it must have known would impose an invisible tax on UK consumers,” said Walter Merricks, who is leading the class action.
The lawyer, who once led the Financial Ombudsman Service added that the prices of “everything we all bought from 1992 to 2008 were higher than they should have been”.
Merricks’ case is one of the first mass consumer ‘opt out’ collective action cases to be brought since the Consumer Rights Act opened the door to these types of claims in 2015.
The law makes it easier for consumers and companies to seek compensation in competition claims by giving them six years to bring a case, up from two years previously, and by enabling anyone forming part of the suing ‘class’ to be a part of the case.
Former financial ombudsman Walter Merricks has been trying to bring legal action against the card giant on behalf of an estimated 46.2 million people since 2007.
He alleged that Mastercard’s breaches of competition law, found by the European Commission in 2007, had led to UK consumers paying higher prices on purchases from businesses that accepted Mastercard.
Merricks’ proposed class action was thrown out in July 2017 by a specialist tribunal, which ruled the claim was “not suitable to be brought in collective proceedings”.
However, in April 2019 it was revived by the Court of Appeal.
Today, Mastercard said it disagreed with the court’s decision.
“We fundamentally disagree with this claim and know people have received valuable benefits from Mastercard’s payments technology.
“No UK consumers have asked for this claim. It is being driven by ‘hit and hope’ U.S lawyers, backed by organisations primarily focused on making money for themselves.
“Mastercard will be asking the Competition Appeal Tribunal to avert the serious risk of the new collective action regime going down the wrong path with a case which is fundamentally flawed.”
Who could be owed money?
The proposed action is an “opt-out” claim, which means potential claimants – anyone who was over the age of 16 and resident in the UK for at least three months between 1992 and 2008, and who made a purchase from a business that accepted Mastercard – are part of the action unless they specifically choose not to be.
Samantha Silver, partner at international law firm Kennedys, said the judgement could open the floodgates for group claims.
“This landmark decision clarifies the test to be applied by the Competition Appeal Tribunal in certifying collective proceedings and indicates that the Tribunal has been too strict in the way they have previously approached these applications. This is likely to lead not only to this Collective Proceedings Order being certified by the CAT, but is also likely to set the tone for future group actions in England and Wales.
“The potential is now here for the floodgates to be opened to further group actions. Claimant groups and litigation funders across the country are likely to start amassing arms to exploit this change in direction.”